The Net Income Figure on an Income Statement Is Calculated

question 50

Multiple Choice

The net income figure on an income statement is calculated before deducting the:

• A) interest expense.
• B) depreciation expense.
• C) cash dividends.
• D) tax liability.

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Definitions:

Investment Decision

The process of evaluating and selecting where to allocate financial resources to achieve anticipated financial returns or gains.

Straight-Line Depreciation

A method of calculating the depreciation of an asset whereby the original cost is reduced equally across each year of its estimated useful life.

Salvage Value

The predicted disposal value of an asset at the conclusion of its usable life.